GM sales fell 19 percent, Ford was down 28 percent and Toyota dropped 21 percent. Honda Motor Co. and Volkswagen AG, which rely on cars for the bulk of their sales, each rose about 1 percent.

Weird, I thought Democrats owed their pandering loyalty to ALL Union-based industry. Now, pay close attention to what Obama said a month ago about the effects of high gas prices: "Americans [will] start changing the kinds of cars they drive if gasoline prices continue to climb." What he DIDN'T say was that "Hope and Change" really means Union members must HOPE for lifetime Unemployment Insurance after Obama's destruction of the economy CHANGEs their employment status to "plant closed." Again, from Bloomberg:

The vehicles that people want are in short supply because the industry has turned on a dime in terms of demand and supply can't quite handle that,'' Alan Baum, director of automotive forecasting for Planning Edge in Birmingham, Michigan, said in a Bloomberg Radio interview. You'll continue to see a decline for the next several months.''

For the second straight month, Ford's F-Series large pickup, perennially the best-selling vehicle in the U.S., was outsold by four cars: Toyota's Corolla and Camry and Honda's Civic and Accord. Nissan Motor Co. reported an 18 percent total decline.

This really is a no-brainer. I imagine new car sales are dropping too. When the price of fuel per month is higher than what you pay for your car, eventually people are going to realize that gas mileage only gets so good. Unless America starts exploiting our own resources soon there will be no new car that will save you money.

A new car means more (more expensive) insurance. All the fees associated with geting a new car (Tax, title and registration fees).

To hell with the enviornment, buying a used car for cash and dropping your insurance payments will save far more money than getting 10-20 more miles per gallon extra. People will figure this out. I know that not everyone will buy a used car, but what will happen to the auto industry when enough people do? You think 28% decline is rough? Try 50% or more. How many cars do these guys have to sell just to break even?

People like their cars, and will do just about anything to keep them. Gasoline is not something americans can do without.

A large part of this is failure to plan ahead due to poor executive leadership. The American manufacturers failed to see this coming and safeguard themselves with sound investments. Toyota too, after a long history of great foresight and brilliant decision making made the foolish decision to compete heavily in the truck market. Of course Toyota has a large line of popular cars to fall back on, whereas Ford and GM do not.

Now Ford and GM are trying to play catchup with large amounts of R&D into smaller, fuel efficient cars, the benefits of which won't be seen for several years. The Democrat's love-hate relationship with high gas prices will only continue to kill the American auto industry at an accelerated pace. We need stable oil prices and we need them now, there's only so much shock the economy can absorb.

Back in '06, Pelosi promised to fix this. They haven't and they won't. Political leadership has had 2 years to see (remember, Katrina blew up oil and gas prices, so it's not like there haven't been signs...or perhaps you forgot all the attacks on Bush over all that went wrong there) that alternatives were needed. They could have had their freaking windmill factories up in Hyannis by now, but for Teddy refusing to obscure his view.

Like all the fun to be had in blaming big oil, it's easy to blame big auto...but there have been abundant opportunities missed and blown by Democrats who have, instead, busied themselves with making the President look bad in preparation for the Obama coronation.

Congress does now own this - the last thing we need is Congress planning staretgy for the auto (or any industry). Rising gas prices have long been forecasted and GM and Ford did have poor strategic planning - they failed to leverage their cash cow to create new products in the up and coming market while Toyota, Honda and Nissan did. No one to blame for this but themselves.

And Congress can't control the direction of oil prices without disaster either - I'd say the number of oppurtunties for congress to have done something to 'prevent' rising prices were and are zero. This is the free market at work.

oil prices are through the roof and the big-3 are shutting down the factories that build the cars that people no longer want?

i come to redstate for thoughtful, insightful commentary with a conservative-twist. to learn and to see things in a different light. most of the time i'm well satisfied. but lately, some of the lead articles are just plain silly and so intellectually deficient i wonder why anyone bothers.

there are lots of legitimate things to write about and blame the other side for. they aren't that hard to find. why create issues out of thin air? why not be intelligent about it? it's only your credibility at stake.

Out of curiosity, how many reading this agree with the following notion:

We're rapidly approaching a fundamental turning point in the history of this country. In the medium to long term, the ascendant price of energy will force us to change the political and economic calculus that served us well throughout the 20th century. We've got to pick our heads up out of the 24hr he said/she said' news cycle and think deeply about how America competes in a world where, for demographic reasons, we do not occupy the mantle of the world's largest economic and cultural entity.

I am contract engineering support for a UAW plant... I've recently read their endorsement for Obama, and it is full of BDS-inspired misinformation.
They claim gas prices are high because of our ill-advised war in Iraq which has disrupted world supply.
They claim (and have been pushing for at least 5 years) that Universal Health Care is all that is needed to save the auto industry simply by taking the costs off the books.
They blame Bush for allowing the housing mortgage crisis.
They go so far as to claim that a McCain term will be a 3rd Bush term.

And I can almost guarantee that those affected by the recent announcements of shift lay-offs and plant-closings will be the most vocal, militant Obama supporters of the UAW.

I'll see if I can grab a copy of their endorsement to post here so we can have a good laugh and be thankful that the UAW has negotiated itself into loud, obnoxious irrelevance.

that they were sold down the river by their unions decades ago? The Democrat-supported UAW overreached contract after contract with their pie-in-the sky demands. Now with a recession upon us, instead of the automakers being in a position to weather the storm, they are saddled with huge pension, health care, and employee benefits liabilities. GM now has a negative book value, and its market capitalization is less than that of even toymaker, Mattel.

So when the shift lay-offs and plant closings come, they should all take a good look in the mirror when they try to fix blame for their misfortune. Maybe they can find jobs making toy cars.

here in my town, 20 new rigs and well heads have popped up in the last 6 months...yes, I said 20. we're too old to go roughneck now, but yessir...we shoulda gone into drilling...and, NO ONE drives off-site in anything less than a 1 ton duelie...diesel of course, King Ranch package preferrably...on their way to the drive thru liquor store for some crown and a fridge pack of coke...oh, and some dip to go with it of course.

You blame the idiot executives for betting the farm on large and inefficient vehicles, not Congress. GM and Ford have shown nearly zero ability to predict how the market would react to increasing gas prices. That's their own damned fault, and they've earned their losses.

Why are people buying more and more Toyotas, Hondas, and Hyundais as compared with Chevys, Fords, and Chryslers? Because those foreign companies make smaller and more fuel efficient vehicles and that's becoming ever more desirable.

You can blame Congress for a lot, and I'm not saying they don't have a hand in this, but GM and Ford have made their own messes. Ford's got, what, one hybrid that's readily available right now. The Escape's not a bad idea and not a bad vehicle. What's the next one they've got coming? No, it's not the Focus, it's the Fusion. Not necessarily a bad idea, but people who want hybrids want the most fuel efficiency possible. Honda dropped the hybrid Accord because it wasn't selling. They kept the Civic because it was.

In March 2005, GM sold 100,210 full size pickups. In all of 2005, Toyota sold 107,897 Priuses.

Why do I mention 2005? That is when GM would have had to break ground on a new plant in order to have full production rolling off the line right now. There were no tea leaves in 2005 that the truck segment would come crashing down *as rapidly* as it did. For that matter, in 2005, Toyota was in a race with GM and Ford to see who could get their redesigned Tundra, Silverado, or F-150 to market first.

Even changing over a current plant takes 18 months to 2 years.

Just a year ago, Toyota required incentives to move accumulating Priuses off the lots.

Now Toyota is having battery supply issues. May of 2008 resulted in 15,000 units due to this. Camry hybrid in May 2008 was 6,000 units. Not exactly tearing it up.

There are major technological hurdles to overcome, that Toyota is still having problems with after 8 years of production.

Some have this idea that you can just flip a switch and build a car. Toyota is not close to required production levels after 8 years. GM has the Saturn Green Line, and Ford has the Escape.

They issue *now* is that while the automakers work to mass produce (because sorry, but 15,000 units/month is nothing) hybrid vehicles, gas prices are too high for ANY auto manufacturer to make any money right now. Any they need to make money to perfect mass production of their hybrid lines.

This means we need to examine the REAL problem; high gas prices and the policies that cause them. Arguing that the Big 3 should be left to wither because they don't have the right product mix doesn't solve any of the problems. The production numbers aren't there right now for any manufacturer, foreign or domestic.

It was a class of vehicle, built off of identical production lines throughout multiple plants.

What I am getting at is ALL of the manufacturers have had to develop the hybrid production process from scratch; aluminum instead of steel bodies and other light-weight components; a new powertrain, new electronics, the whole thing.

Battery production is nowhere near that capacity, for any manufacturer.

It isn't the domestic Big 3; it is all manufacturers. GM tried the E-85 Flex Fuel line, since it integrated into their manufacturing processes much easier, but now we are seeing how that is no longer vogue.

The point is, *everyone* is behind the curve on hybrid production, even Toyota. Developing these new technologies in the lab is one thing; getting them ready for mass production is quite an entirely different challenge altogether. Like I said, Toyota's been trying for 8 years, and they still can't do it.

But with high gas prices and plummeting sales of mundane ICE vehicles, the manufacturers are rapidly losing funds needed to finance this fundamental overhaul of the production process.

It isn't just about Hybrids - they fell behind in all the smaller vehicle classes. It's funny you picked March 2005 because Toyota had its best ever (at the time) month inclduing 104,000 passenger vehicles.

The American based manufacturers made the wrong bet - plain and simple. They didn't see the movement in the market and they are paying the price - R&D is a longterm bet and they lost it becuase they were to concentrated in the wrong class (its worth noting that Toyota has also made big inroads in the truck market hitting GM on their turf while consolidating gains in the passenger vehicle classes).

In any case, business is business, markets are what they are if there aren't enough cars available that customers want the market will adjust - the last thing we need is government policy to try to prop them up.

GM was forced to go where the money was... full-sized pickups and SUVs. From the mid-90s until early 00s, GM enjoyed a remarkable run; couldn't build enough, and made $10,000-$15,000 per vehicle sold.

Toyota was able to make inroads in the truck segment because GM spent the better part of the early 00s reacting to the small SUV "crossover" market. Toyota hit the "crossover" SUV market and caught GM by surprise. GM had to respond (hence the Equinox, etc), which allowed their full-size truck/SUV line to stagnate. It's all a very fluid action/reaction game.

I'm not going to try to defend GM's business decisions (they are indefensible). I'm trying to defend the industry as a whole re the hybrid lines, and point out that Toyota hasn't exactly perfected the manufacturing process of these vehicles either.

All of the manufacturers are behind the curve, because gas prices rose too fast.

The domestic Big 3 are more behind the curve because they dominated in the truck/SUV segment for so long. They took the money when they could.

Where did it all go? That's a whole different subject altogether.

But right now, there is NO manufacturer able to produce hybrids at the rate needed. Sure, Toyota dominates the small car market, but that is more due to poor marketing on the part of the domestics than anything.

"GM was forced to go where the money was... full-sized pickups and SUVs. From the mid-90s until early 00s, GM enjoyed a remarkable run; couldn't build enough, and made $10,000-$15,000 per vehicle sold."

What they needed to do was take the cash that was spinning off and invest in developing better passenger vehicles to compete in the changing marekt - for whatever reason they missed on their outlook of demand that's that. Well run companies are busy working on the next product - not living off the current one.

"Toyota hit the "crossover" SUV market and caught GM by surprise."

Exactly, should never happen if you intend to maintain your position at the top.

"But right now, there is NO manufacturer able to produce hybrids at the rate needed. "

So what? Production will catch up with supply, markets aren't instantaneous - so what? Nobody needs a hybrid - we are not talking about clean water here. Government doesn't need to bail out industries that are struggling in the market.

"The domestic Big 3 are more behind the curve because they dominated in the truck/SUV segment for so long. They took the money when they could."

That excuse wouldn't fly in a company that you expect to succeed - complacency is not a valid business stratefy.

"What they needed to do was take the cash that was spinning off and invest in developing better passenger vehicles to compete in the changing marekt"

In the mid-late 90s, at the height of the SUV/Full size boom, there was no changing market. If anything, the foreign automakers were scrambling to break into the SUV/Full size pickup market.
But here's some things GM at least did.

June '98 - Launched new Grand Am. I'm personally proud of this one, not because of any connection to it professionally, but because I have owned one for 10 years, 290,000+ miles on it, original engine/transmission. Great car. 27 mpg mixed city/highway.

Along the way, there was the Saturn VUE, the Cobalt, the G6 to replace the Grand Am, a couple of other new Saturns that I forgot their names...

There was the redesign of the mid-size pickup, the Colorado and Canyon to replace the S-10. The was an investment of over $1 billion, brand new plant.

They were certainly NOT sitting idly, counting the money rolling in. Most of their product line has been fully redesigned from the ground up over the last 10 years.

"So what? Production will catch up with supply, markets aren't instantaneous - so what? Nobody needs a hybrid - we are not talking about clean water here. Government doesn't need to bail out industries that are struggling in the market."

Production will catch up with demand in the non-hybrid cars soon enough, yes. But remember, it takes approx 2 years to change a plant over from truck to car. It takes 3 years to build a new one. To blame domestic manufacturers for not predicting that gas prices would double over 2 years is mis-placed. 2 years ago, the foreign manufacturers were doing all they could to break into the SUV/Full-size pickup segment, for goodness sakes.

So again, it goes back to gas prices doubling over two years, and have there been any policies that contributed to that. It has been argued repeatedly that congressional democrats are to blame for restricting supply which helps increase the volatility in the market, and democrat's short-sightedness has led to the sky-rocketing gas prices. There are many places to argue that.
I for one agree with that assessment.
Given that democrat policies have contributed to the doubling of gas prices, I find it amazing that Big Labor continues to walk lock-step with the left, as the policies of the left indirectly cripple their employers.

No one is asking for a bailout. We're asking for the government to get out of the way, stop mandating fuel standards that everyone knows will hurt domestic manufacturers; stop restricting domestic supply of oil which is a factor in higher gas prices which hurts domestic manufacturers. Stop mandating "boutique blends" of gas which segment the market, restricting the free flow of goods by making surpluses of one blend of gas in one area illegal to use in a different area where there are shortages.

That is what I'm asking for. It is amazing that those whose livelihood depend on it continue to support the politicians that maintain these artificial distortions to the market and indeed ask for more.

The Big Three did not diversify enough to hedge against rising gas prices, although the rate of rise probably could not reasonably have been predicted. Thus their punishment will probably be in excess of their miscalculation, but life isn't fair.

However, the Democratic-lead Congress bears substantial blame for opposing the President's energy proposals without any alternative plan, which has contributed the price spike in response to tightening supplies by preventing development of new U.S. supplies. Their inaction has intensified the auto industry's losses, and as others have pointed out, the cash squeeze may prevent the industry from coming up with sufficient capital to respond in a timely fashion.

The market will work from here: the supply of autos will decrease (and shrink the auto industry) and their price will increase; less car production will help contribute to lowered demand for gasoline in response to higher prices. Not clear how much impact this will have on world markets regarding supply vs. demand, except that ultimately, falling demand will stop price increases.

Not quite braindead, and they also have something akin to the Republicans' PR problems. No matter what they do, the stories always start out with a litany of bad news they've had to suffer through, then they have to talk about that for a while, then there is just a bit of time for the good news.

*"GM and Ford have shown nearly zero ability to predict how the market would react to increasing gas prices. That's their own damned fault, and they've earned their losses."*

That's unfairly harsh. It isn't that they didn't predict "how the market would react to increasing gas prices." Gas prices have doubled in about one year (more or less). Nobody predicted prices would go up that fast. There was no reason to expect it--it's unprecedented in a time of sufficient supply, which we have right now. I can assure you they've been considering all alternatives as the price has risen. If it were possible to magically change the truck lines to produce hybrid Escapes and Tahoes, they'd probably do it. But it isn't that easy.

I think Ford has dropped the ball on their hybrid Escape (which has been available for about four years) in marketing terms, but they haven't sold well until now, either. I don't know how the hybrid Escapes are doing now. I think that the Prius hasn't sold well until lately, either.

The 'hybrid' appellation adds about $6000 to the price of the Escape.

*"Why are people buying more and more Toyotas, Hondas, and Hyundais as compared with Chevys, Fords, and Chryslers? Because those foreign companies make smaller and more fuel efficient vehicles and that's becoming ever more desirable."*

Even Toyota sales are down now. Here is where the PR problem manifests itself at its worst. Quality of US cars is comparable to the foreign ones. You'd never know it from reading the popular press or listening to "Car Talk." GM and Ford both make small, inexpensive, gas-efficient vehicles, as well as the larger ones that have been more popular until now. One would not think so from reading MSM stories on the subject, nor from reading your comment. (Not picking on you, it's just an apt example.)

None of that is Congress's fault, however. It may just be human nature, or it may be anti-American bias in the press. I'm pretty sure that's the case on Car Talk.

"GM and Ford both make small, inexpensive, gas-efficient vehicles, as well as the larger ones that have been more popular until now."

As do a lot of their foreign subsidiaries, such as Mazda. In fact, a lot of these companies just rebrand the parent companies products. For example, Mazda's B-Series truck is a rebadged Ford Ranger.
Also, A lot of their foreign subsidiaries, such as GM's Opel, have made small cars for a long time. But then again, was the last time you ever heard of Opel cars?

"One would not think so from reading MSM stories on the subject"

Agreed. This even extends to magazines such as Car & Driver to a certain extent. Of course, those magazines have been biased against American cars for as long as I can remember. As far as the MSM goes, they should look up a company by the name of Saturn, who has made pretty much nothing but compacts since they were founded in the early 1990's.
----------------------------------- 4.62, 0.51

When I graduated high school, intern mechanical engineers were churning out carburetors (the old venturi jet styles that gasoline was mechanically sloshed into) that could get as much as 50 MPG in those 70 model steel tanks. The Big 3 would promptly purchase the patents for somewhere around a cool $1 million and lock them away. Now, we're to blame the unions and Dems for gas prices while assuming that Big Oil will kindly take a profit dive if we allow them to drill as they please in order to break our addiction. Truly amazing!

for 15 years. If a car company could re-vamp 40 year old technology and exceed present day computer controlled fuel injection and airflow systems, they would be making a friggin fortune. Sorry, that is a hoax.

which I guess had been embellished that much as an urban legend even before the Internet opened up to the masses. I don't remember any of the people who brought it up to also have a convincing explanation, always as something "mysterious," or at least beyond their non-automotive training, and I never sent money by mail for someone's advertised "report" on that subject.

I'm guessing this old story is told largely by people who can't really tell you how it's any different from Honda's 42 mpg system in some of their early-90's models, well before Honda's own hybrid designs.

It also makes me wonder all over again why the Honda jet hasn't been more celebrated.

on your urban legends. Your version doesn't make all that much sense. "The Big 3" wouldn't gain anything from locking away the "magic carburetors". It's the big evil oil companie's that bought them up and locked them away. (Make that little change and then you'll have an easier sell).

This post tells you that Congressional inaction has allowed gas prices to increase...and that higher gas prices have caused car manufacturers to lose money because no one is buying their stuff...Congress has had the power to do something about improving the situation (and promised they would when the Dems took over in '06) but has chosen instead to work over the Bush administration in hopes of expanding their majority and getting a Dem in the White House. All this when they COULD have been allowing offshore drilling, expanded refinery capacity, ANWR, more nuke plants, etc.

Their lack of action in ANY of these areas has allowed gas prices to creep...the automakers did not do anything to increase the price of gas folks...pay attention please?

Increased gas prices has caused automakers to stop making vehicles that use a lot of gas...because people aren't buying them. This is causing them to close plants and lay people off...Good Lord...are you paying attention?

It is NOT...repeat NOT the fault of automakers that gas prices have gone up. It is also not their fault that, down-line, things have gone to hell in a handbasket. It is the fault of Congress. Next, you'll be telling me that corn prices are too high because of Chrysler.

Pay Attention-Congress has chosen to ALLOW us to suffer...to make a point at our expense-green = good, gas = bad.

I challenge that there is anything (short of disastorous price controls) that congress could really do to materially lower gas prices and certainly to keep them from increasing in the near term. Political ramblings aside, the oil market is fairly efficient and the supply we could add would barely move worldwide prices (unless we nationalized it and sold it below market costs to the domestic market - which is the kind of government interference we can do without).

You almost sound like a democrat trying to absolve auto manufacturers from their business failings - and it is shocking to be having this discussion on a conservative site. Its not their fault that gas prices have gone up (who said it was?) it is thier fault they didn't anticipate the changes in the market and have a product mix that could compete.

it seems a little deliberate on the mass media's part to distract us from noticing that companies like Kia are successfully building cheap and cost-efficient SUV-type vehicles in American plants, to say nothing of Toyota's continuing success.

As I commented above, the auto industry didn't diversify/hedge enough against a rise in gas prices and certainly have culpability as far as there being consequences.

At the same time, the chronic inaction of Congress led to this price rise being much more rapid and sustained than could have reasonably be predicted back in 2005.

However, life isn't fair, and the auto companies are going to suffer severe punishment from the market. But in this adult world, it would be atrocious public policy for Congress to give the auto companies a "guilt offering".

Besides, the government is far more likely to make things a lot worse if they decide to do some kind of "rescue" (think mortgage bailout as another case in point).

Nonetheless, Congress could get off its duff and set in motion the process of tearing down its legislated restrictions on increasing supply so that the market has a chance to start working.

I don't see any discussion on environmental and safety regulation have on the MPG vehicle can achieve. Also the cost of keeping my used gas inefficient vehicle is still cheaper than purchasing a new vehicle. Higher gas prices have force me to take a more diligent look at keeping my old vehicle costs versus just getting a new vehicle. This is because of the higher incidental cost of ownership of a new vehicle.